Parker Harris

Nearly every generation sees the birth of what for it will define modern life as going forward. As uncertain as the twenty-teens have been so far, some day in retrospect economists may pinpoint this decade as important as the tipping points of 1870’s and the 1920’s. If that turns out to be the case there may be no better event to symbolize the beginning of the era than the Salesforce fiscal year kick-off in San Francisco this week.

It has been an eventful year so far for the company, its city (with the Super Bowl festivities taking over much of downtown), and even the nation. On the day after polling began in the presidential primaries (which were eventful in their own right) Salesforce CEO Marc Benioff laid out an annual plan and announced a reshaped product line that will contribute much to the story of what will be the new modern in enterprise software.

Just back from the annual confab of the rich and the forward looking at Davos, Switzerland, Benioff gave revenue guidance to the financial analysts pegging his company’s work product at $8.1 billion for the fiscal year that was only a few hours old. As a subscription company Salesforce can be reasonably sure of its guidance because most of those revenues are already under contract as unbilled deferred revenues thus making climbing the $8.1 billion mountain much easier.

Benioff mentioned the Fourth Industrial Revolution as a topic of discussion in Davos, which might correspond to the launch of a new long economic wave (aka a K-wave). Long waves are often associated with the late Russian economist Nicolai Kondratiev and I correlate K-wave formation with what I see as the inflection points around us today.

The product line received the lion’s share of visibility, but in one way, it seemed to me under reported. While the technology was impressive, its impact on business is the real story and that will take years to write.

The Salesforce product line has been renamed using a Lightning moniker attached to nearly every cloud, so for instance Sales Cloud Lightning is now how we reference what was once simple SFA.

Lightning-izing the product line brings a great deal of complexity to the technology but this is largely hidden from the user so that we can more truthfully refer to the product line as sophisticated rather than complex. This is important because it directly affects the perception of new modernity.

For a very long time, CRM product sets have been on a ramp up to complexity as vendors, including Salesforce, layered subsystems on top of subsystems. These included collaboration, community, analytics, journey mapping, wireless and mobile accessibility, and more.

The evolution of the multi-tenant, metadata driven cloud platform was a key piece of the puzzle. Under this umbrella, all complexity can be consolidated and managed so that users can construct business processes on the platform without necessarily getting hip deep in code. But that’s not sophistication. Sophistication happens when one can achieve Arthur C. Clark’s vision that new technology should be indistinguishable from magic. I think that’s where we’re going.

Salesforce didn’t get all the way to magic with its Lightning announcement but it certainly put down a marker, which I believe will serve as a reference point for the birth of the modern.

Fundamentally, the technology is easily accessible by those who need it but it has been abstracted. A new layer that supports the user as if it was an assistant in a business process hides the complexity with a sophistication that begins to border on magic. So users are reminded, they are presented with data and information to enlighten their activities, and data that surfaces within a business process directly or through inference, is captured and teed up for future analysis that will again inform users in their processes. This is cool stuff.

Let’s have a look at the announcement’s big parts.

Lightning—the platform

Everything starts with the platform now known as Salesforce Lightning. Co-founder Parker Harris has, over several years, guided his developers to build a platform and stack that makes the magic possible. The Lightning-ization of Salesforce is largely the story of building the new platform full of services and of enabling all the apps to access these services and deliver them to the customer and employee facing applications.

Sales Cloud Lightning

SFA has been reimagined and added to so that it is a very different species than the one we started writing about in the 1990’s. Then SFA was a system of record, a tool for tracking basic contact information and the size of an order or a deal. The latest incarnation includes:

CPQ from recently acquired SteelBrick, which will accelerate, and for many companies standardize, the configuration, pricing, and quoting process.

Lightning Voice, an embedded telephony service that will see use in sales as well as service. Lightning Voice will enable reps to connect with prospects within the Salesforce application with all of its suggestions and prompts. Its functions include click-to-call, auto-logging of calls, and call forwarding.

SalesforceIQ Inbox, which brings the email inbox into the CRM suite through a suite of iOS, Android and Chrome apps that weave together Sales Cloud data with email and calendar apps of one’s choice.

Sales Wave App is just what you’d expect, analytics for the sales process. It is one of the sources of the information and suggestions that will change selling. New dashboards for things like pipeline trending were things that early SFA users could only imagine.

Salesforce1 Mobile. The big news here is full offline capabilities for iOS and Android devices. There are also 20 new Lightning Sales Components but I am getting tired and I recommend looking over the press release for even more detail. Check out Sales Path and Kanban.

Service Cloud Lightning

The Service Cloud got the same treatment in that service processes have been re-imagined but I’d say that this process of enhancement has been more evolutionary than revolutionary over several years. Nonetheless there were some big announcements including Field Service Lightning, which provisions CRM tools to dispatchers who will receive suggestions for service assignments based on location, technician training and skills, and availability. An Omni-Channel Supervisor gives call center managers more insights to better manage agents’ workloads.

Milestones

Salesforce is also noting its 49th and 50th product releases in the coming year. These milestones will also bring to market further enhancements in virtually every part of the product line. For instance, the company will release Heroku for the Enterprise aimed primarily at developers of highly scalable customer-facing apps. There will also be Marketing Cloud announcements later in line with enhanced uses for Journey Builder, which in my estimate may be the most important part of any CRM going forward.

Briefly, journey mapping enables vendors to bring scientific management to what have always been chaotic customer-facing processes. When used appropriately journey mapping will significantly enhance the customer experience and drive better engagement. It’s going to be a big deal.

Pricing and packaging

Salesforce continues to use a gold, silver, bronze approach to product packaging and pricing and it has taken this opportunity to reset the packaging to reflect the bulging product line. It would be a sales nightmare to sell this product line a la carte and it would also be counter-productive to the user who needs all the pieces and parts to fulfill the vision of modern sophistication. So Benioff told me that the company will continue with three levels of pricing, albeit at somewhat higher rates, and it will pack more technology into each level. See the company for details.

Finally

The Lightning-ization of Salesforce completes the solution set transition from a system of record to a system of intelligent engagement. Using all of the capabilities together makes it difficult to do business as we have always done it, which is a good thing. I don’t think it’s possible to sandbag deals any more or generally hide things from the boss. CRM is no longer a chore to be performed on Friday afternoons. It is an assistant that will enable many people to work better, smarter, and maybe more productively.

But long as customers are still involved, nothing I have seen will truly accelerate business processes beyond the acceleration on the vendor side. Customers will still think and deliberate about offers thus presenting us with a kind of speed limit much as the speed of light is the ultimate speed limitation in the universe. But these re-imagined tools do something as important as speeding up customer-facing processes, which I have discussed here before. They open the door to managing many more customer situations per employee. This will of course raise productivity but even more important from a sales process standpoint, they make it possible to expand skinny pipelines, to make them fat and thus enable revenue acceleration if not exactly shortening individual deal times.

What a difference a decade makes. Ten years ago, the booths on the Dreamforce show floor were little more than outposts for widget-makers but fast-forward to Dreamforce 2015 and one is struck by the number, variety, and size of the partner community. But that’s only part of the story, often out of sight is the sizeable display of talent that has consolidated around Salesforce from other industry sources.

A little more than ten years ago Salesforce was a precocious upstart vendor of SaaS computing and Siebel was the top dog—the first billion-dollar CRM company—and it held a large proportion of the available CRM talent. But at this year’s Dreamforce there were numerous Siebel alumni all drinking the Salesforce1 Kool-Aid.

Former Siebel EVP, David Schmaier, after a sabbatical from the industry, started Vlocity, a company dedicated to making vertical market apps for healthcare, financial services, and insurance. Vlocity takes a page from Veeva, a highly successful company in the pharmaceutical space started by Siebel alumnus Matt Wallach and Peter Gassner (Salesforce, PeopleSoft).

Anthony Lye, (Siebel, Oracle and others) now CEO of HotSchedules a cloud service application for the restaurant industry, was prowling the floor. Kevin Nix and Narina Sippy ex-Siebel stars are spinning up Stellar Loyalty. Steve Mankoff is now a general partner with TDF Ventures and was keeping tabs on some of his investments. And Bruce Cleveland, former GM of Siebel and now general partner with InterWest Partners was not seen but his presence was felt in companies as diverse as Aria and Vlocity.

The presence of so many old CRM hands concentrated as they are around Salesforce will likely help further accelerate the company’s growth—certainly the potential is there. The partner keynote delivered by EVP Tyler Prince, revealed a $135 billion revenue opportunity calculated by Salesforce over the next 5 years. Even if you discount that by a large factor you will still be left with a lot of billions. That’s one reason so many industry veterans are attracted to Dreamforce.

The companies in attendance have dramatically grown in stature over the last decade and the show floor included many public companies or future IPO outfits including in no order, Xactly, FinancialForce, Zuora, Vlocity, Apttus, Full Circle Insights and about 390 others. Many of this group rented storefronts around the Moscone Center to provide meeting space and hospitality to their customers and prospects. Most also sponsored big parties and scheduled user events coinciding with Dreamforce to further induce customers to attend. Apttus raffled off a Tesla, FinancialForce sponsored a scotch tasting (full disclosure: I tasted the scotch but did not win the Tesla).

At the same time, Salesforce was trying to get a few messages out so there was plenty of discussion of the new Lightning UI for desktops and laptops. Significantly, the UI was announced last year but only for mobile devices—a demonstration of the importance of developing for the small screen first these days. The company also announced SalesforceIQ a rebranded absorption of RelateIQ for SMBs and the enterprise. The IQ product is designed to capture inferential data and turn it into useful things like new meeting appointments and follow up actions without requiring the rep to manually enter the data.

To go with Lightning, Salesforce introduced an IoT cloud powered by Thunder, the company’s initiative to corral the billions of devices that will need cloud connections by 2020. There were also specific keynotes for every cloud in the company’s kit and those announcements were way too numerous for this piece. Fortunately they are all preserved on YouTube.

But the biggest bang comes whenever Salesforce assembles a gang of smart people to talk about the future. They don’t do it every year and perhaps that’s wise since major change of the type they like to discuss follows more of a punctuated course, like an EKG.

This time they had a lively discussion about what happens when Moore’s Law and Metcalf’s Law collide with business in a big way. That intersection is best explored at length in The Second Machine Age and Race Against the Machine both by Brynjolfsson and McAfee of MIT’s Sloan School and their ideas were referenced more than once. You may have read those names here a few times prior to this. The questions they ask, which we are still searching for answers to, are of the type, what happens when machine intelligence becomes good enough to begin replacing humans at knowledge work.

We’ve all seen automation replace rote manual activities in business thus boosting productivity. The standard explanation is that the human resources are liberated to pursue higher-level value-add. But the rise of the service economy with its lower wages and hard to find jobs suggests that the future might not be as rosy. What happens when “there’s an app for that” means a pink slip?

Happy outcomes don’t automatically happen but the track record since the Industrial Revolution suggests that not only do new jobs spring up but also new kinds of jobs; an easy example is the software industry analyst. No one I know went to school to become an analyst—I certainly didn’t. There is no room for complacency though. Machines are now capable of writing reports in reasonably good English (though doubtless without the same panache as yours truly). It’s different this time; replacing manual labor is one thing but replacing thinking is much different. It will be a very different ballgame as Jeremy Rifkin writes in The Zero Marginal Cost Society when everyone has a computer and a 3D printer. That’s something the Salesforce brains trust didn’t get to this time.

Deep futures aside, it’s inescapable that the next shift in the front office and the enterprise will be adopting many of the platform technologies displayed on the show floor in order to support more automated processes which are rapidly replacing the transactions we’ve grown to accept in many vendor-customer interactions. Process isn’t exactly a new watchword yet but vendors like Salesforce and others are delivering increasingly capable suites that will make a shift to process rapid once it officially starts. (It has started, you might now see it but you also don’t want to be the last adopter.)

Also, kudos to founders Parker Harris and Marc Benioff for putting themselves on the spot and taking on some tough issues like sponsoring a Women’s Leadership Summit. They sat down for some interesting dialog and hard questions from Kara Swisher, Co-Executive Editor, Re/code about how to provide better opportunities for women in the tech industry. It was not an easy discussion because if you watch the video, you can see everyone trying to puzzle it all out. But Benioff and Harris didn’t shrink from it and expressed a commitment to put the issue at the top of their agenda (heck the summit was their idea). Though more needs to be done, you can’t put Salesforce, even today, in the same category of many older tech firms and the presence of women in the conference was notable. Still we need more.

So to net this out, Dreamforce had its requisite cornucopia of products, announcements, and invention. But it also held out some provocative insights into the future of work and our society, two things that will drive demand for its products and services long after this year’s new wiz bangs are history. To me that’s why you go to Dreamforce.

Fifteen is an interesting anniversary. We tend to think about major anniversaries in ten-year increments with the five-year internode acting more as a gut check. Fifteen is close enough to the creation that all of the relevant parties are still around and most are still in place. But it’s also far enough in the rearview mirror to provide the perspective needed to make judgments. Salesforce.com is fifteen and celebrating it.

Salesforce was not alone in its niche fifteen years ago and if you recall the time you know that “dot com” was the watchword of the time. The Internet was still a novel innovation and companies were trying to figure it out as a business tool in equal measure with trying to get straight how to move their sunset manufacturing to ultra low wage places like China and, well, China. Maybe India too.

My story in relation to Salesforce picks up only fourteen years ago because, fifteen years ago there was nothing much except a business plan and a lot of code to write. It would take a year for the company to bring a product out. By happy accident, I joined the analyst firm Aberdeen Group fourteen years ago with a mission to cover SFA. My instincts have always drawn me to disruptive innovation and I had a notion that I was going to cover hosted deployment models that focused on SFA. How lucky was that?

I was just getting settled into my job when Salesforce representatives came to Boston to brief the analyst community as part of the company’s rollout. Having come from a technology sales and marketing background and having directed the development of an in-house SFA system in a prior life, I got it right away, especially the part about subscriptions and being able to access customer data from anywhere that I could get an Internet connection. I was an immediate fan.

But it’s important to understand that Salesforce was not the only game in town. There were lots of hosted services offering an SFA product, though today they have all either disappeared or been rolled up into larger companies. Only Salesforce remains as an independent first mover and it has become a force in the CRM industry largely because of the vision of a core group that includes co-founder and technology guru, Parker Harris and, of course, CEO, Marc Benioff.

Today Salesforce looks like a no-brainer but fifteen years ago it was anything but. It was going up against some Goliaths with a stripped down product in a market where its only innovation was not the product itself but its delivery and business models. If it or any other SaaS company was going to survive it would have to steal market share from Goliath. Not a pretty picture but the stuff of corporate lore and mythology.

It is my firm belief that absent Benioff’s genius for promotion and an iron willed determination to sculpt the future of enterprise computing, Salesforce today would be just more road kill on the (metaphorical) side of Route 101.

But Benioff and a team of believers pulled it off. He made storing data in the cloud not scary but sexy. He took on the dominant player in CRM at the time, Siebel Systems, much earlier than I thought practical, with a campaign that featured a little kid writing at a blackboard, “I will not let Siebel take my lunch money.” It was a brilliant summation of everything Salesforce and Benioff wanted to achieve at the time. Benioff wanted to deliver an order of magnitude improvement in enterprise software’s dismal cost curve while also making CRM an easy installation that even small and medium businesses could accomplish.

In the process, Salesforce became the primary industry promoter of the subscription model and started a whole economic model that resonates throughout the culture today. No they weren’t the only ones doing subscriptions, far from it, but Salesforce and Benioff made subscriptions hip and sexy and sexiness drove success.

Salesforce has undergone more self-reinvention than I can count over the last fifteen years. Actually I can count it. The company seems to reinvent itself every 2 to 3 years, a torrid pace but one that has brought it to a leadership position in numerous Gartner Magic Quadrants, and the verge of the Fortune 500.

If the company has an Achilles Heel it is the tendency that all rapidly growing companies have of reverting to the mean, becoming average. In other words how do you keep “La Revolution” going without becoming a self-parody or the Fidel of tech? Here Salesforce has had incredible luck not only with its serial reinventions, but have you noticed that the company’s reinventions have all involved building products that it needs internally that also happen to be what the market needs too?

Salesforce’s early customers were emerging companies like itself so they needed high quality systems that didn’t cost a lot but that would enable them to compete with the big boys. As the successful ones grew they needed better ways to communicate and collaborate internally to prevent the stasis and sclerosis that organizations with large populations and rigid processes inevitably acquire.

Salesforce delivered Chatter, its collaboration tool and workflow to automate as many internal processes as possible. It embraced the social wave with a bear hug that has enabled it to effectively communicate with customers and prospects and it has shown its customers how to use these tools to streamline their operations too.

The company has also paid close attention to IT and application development. Understanding the disruption that mobility is causing, it has moved to provide development, maintenance, and deployment tools that enable business systems to evolve at rates very close to their underlying business processes. Exactly what it also needs in its continuing evolution.

While the company might not revert to the mean while Benioff and Harris are running things, it’s worth noting that the mean is chasing Salesforce. Every major business software vendor, plus a cadre of innovators spotting niche opportunities, is hot on the trail of Salesforce’s innovations.

Windows is effectively dead as a place to run business apps except for its necessity for supporting browsers where most applications run today. Everyone has a cloud strategy today including all of the nay-sayers of a decade ago who finally gave up being wrong all the time. Everyone is trying to develop an App Store — a term Salesforce coined before Benioff gave it to friend Steve Jobs and Apple — on that, all I can say is that Benioff is not always right. Ditto for the emerging ecosystems of partners with plug and play applications.

The list goes on and as if that weren’t enough, there’s philanthropy to discuss too. Benioff has been one of the earliest and most vocal supporters of the 1:1:1 model of philanthropy that posits donating one per cent each of a company’s equity, people time, and profits to charity. The Salesforce.com Foundation has become a model in Silicon Valley and other companies have emulated it creating a new force in public giving. Benioff is also not shy about his $100 million donation to UCSF Children’s Hospital, which will certainly enrich San Francisco and the Bay Area for a long time into the future.

There’s more but it’s enough for now to say that Salesforce.com has made a significant mark on an industry, a region, and even on the way we think of business today. That’s not bad for a fifteen year-old.